Interior Ministry Proposes Car Excise Tax Overhaul

The Interior Ministry has proposed a bill that would overhaul car excise tax in an attempt to curtail import of cars older than 6 years.

The proposal is part of a package, which among others also includes bills banning import of right-hand drive vehicles starting from March, 2016, as well as increasing fines for certain category of traffic violations and introducing point system linked to traffic tickets.
 
The proposal, if approved, will slash excise tax rate upon import of cars between 1 and 6 years old and increase the tax rate on cars 7 years and older starting from January, 2016.

Excise tax rate on import and registration of one year old cars will reduce from GEL 1.5 to GEL 1 per cubic centimeter of engine capacity. The rate will be halved to GEL 0.7 per cubic centimeter on two-year old cars and the rate will be reduced to GEL 0.5 for cars between 3 and 6 years old per cubic centimeter of engine capacity. Excise tax on cars older than six years will increase – the older the car, the higher the rate. The rate will increase by more than three-fold to GEL 2.5 per cubic centimeters on cars older than 14 years.

For instance under this scheme, if approved, excise tax on import and registration of a 10-year-old car with an engine capacity of 2,000 cubic centimeters will be GEL 2,200 instead of current GEL 1,000. In case of a car older than 14 years with the same engine capacity the rate will go up from current GEL 1,600 to GEL 5,000. Excise tax on 3-year-old car with an engine capacity of 2,000 cubic centimeters will be reduced from current GEL 2,600 to GEL 1,000.
 
45% of all vehicles in Georgia were between 11 and 20 years old and 45% – older than 20 years, according to the Interior Ministry’s 2014 data.

The total number of registered vehicles in Georgia almost doubled since 2007 to more than 1 million in 2015, about 90% of which are 11 years and older.

In a separate bill the Interior Ministry also proposes to ban import of right-hand drive vehicles starting from March, 2016. The proposal does not imply banning of driving such vehicles, meaning that owners of right-hand vehicles imported before March, 2016 will be able to continue using their cars.

In other proposals, the Interior Ministry is also offering to introduce point system correlated to different traffic violations. Under this proposal a driving license holder will be granted 100 points; for each traffic ticket, along with being fined, a driving license holder will also lose certain number of points; if 100 points expire within one year a person’s driving license will be revoked and he or she will have to pass driving test.